May 13, 2011

By Bryan Rahija

POGO today released a new report and accompanying database examining the issue of the revolving door at the Securities and Exchange Commission (SEC).

Our main finding? More than 200 former SEC employees who left the agency between 2006 and 2010 have taken jobs representing clients before the Commission.

We based our analysis on post-employment statements filed by former SEC employees, which the SEC requires if a former employee plans to represent a client before the Commission within two years of leaving the agency. POGO obtained the statements through the Freedom of Information Act. Our database allows you to search for statements by a former employee's name, former title, former division or office within the Commission, new employer, or date of statement.

All told, 219 former SEC employees filed 789 post-employment statements from 2006 to 2010, disclosing 131 new employers, including firms that provide legal, accounting, consulting, and other services to the SEC's regulated entities. Put it all together, and you've got a revolving door mosaic that raises some big questions. From The Washington Post:

“Has the revolving door infected the SEC’s capacity to do its job?” asked Nick Schwellenbach, POGO’s director of investigations. “At a minimum, the revolving door has undermined the integrity of the SEC’s oversight on numerous occasions, and the SEC isn’t policing it as aggressively as it should,” he said.

John Freeman, a former SEC lawyer and now an emeritus professor at the University of South Carolina School of Law, did his own SEC "revolving door" study in 2003 and found a high proportion of officials left to work for regulated entities.

"A lot of the brain power and logistical know-how that existed in the SEC was being used for the benefit of mutual fund managers and not for the benefit of shareholders," said Freeman

One frequent critic of the SEC’s revolving door, Republican Sen. Charles Grassley of Iowa, said the new POGO database shows that restrictions on ex-government workers from other departments “must be made to apply to the financial regulatory agencies. “

“Along with the restrictions, there should be public disclosure of where these former financial regulators are working and what issues they are working on,” Grassley said in an emailed statement. “Transparency is a proven back-stop to enforce ethics rules.”